Free trade hitches, but Japan ready to sign security pact

By
Mark Kenny, John Garnaut

The foreshadowed free trade agreement between Australia and Japan is facing some last-minute hitches, but a historic defence and security pact will be signed when Tony Abbott arrives in Tokyo this weekend.

The defence deal, which has been agreed to in principle was expected to be signed off by a cabinet security committee this week.

It comes despite fears that Monday's decision by the International Court of Justice ending ''scientific'' whaling, could set back the bilateral relationship.

Instead, the pact promises to elevate Canberra-Tokyo ties to their highest-ever level, bringing the former WWII enemies into a defence and security partnership reaching to many areas of strategic policy.

Japanese officials said the court's whaling decision on Australia's application was not relevant and had already been accepted despite the disappointment.

While trade had been billed as the major element of Mr Abbott's state visit, officials on both sides have said reports of an imminent deal may yet prove premature.

They say negotiations remain deadlocked over Tokyo's tariffs on Australian agricultural products - particularly beef - and Australia's mark-up on Japanese cars.

Mr Abbott has offered to scrap the tariff on cars but wants a concrete commitment to halve the current 38.5 per cent tariff on beef.

While finalisation of a free trade agreement is still likely, a planned signing ceremony on Monday may yet be abandoned.

However, the two governments have also been busy behind the scenes discussing defence and security issues and are on the cusp of a historic announcement.

Japan has long banned the export of defence equipment, but has granted exemptions to both the US and, more recently, Britain, allowing for the joint development of defence technologies and the trade of defence equipment.

This week, Japan said it would ease its weapons export ban in a bid to gain access to international markets in limited circumstances.

Britain signed its defence-systems agreement in 2012, prompting speculation that would deepen ties commercially on joint defence projects, and strategically, with greater co-operation on operational security matters.

Mr Abbott's eight-day tour of north Asian capitals takes in three of Australia's top four trading partners, China, Japan, and Korea.

By taking in Japan and China in the one trip, he has avoided the diplomatic trap encountered by Kevin Rudd in 2008 when he visited Beijing, but not Tokyo, in his first major international foray.

But Mr Abbott flies into the region at a time of heightened tensions between the two over a group of islands in the East China Sea, and as each power eyes the other over growing military budgets.

He has made no secret of his own position, declaring last year that Japan was Australia's best friend in Asia.

Japan's restriction on military spending has been gradually weakened and the country is looking to ramp up its defence capabilities as it views an increasingly assertive China and an ever-erratic North Korea.